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One of the benefits of using a management company to run the DMP is they have contacts and more negotiating authority with creditors (such as credit card companies) who would not otherwise negotiate with a sole debtor.
The Government have been through a ‘consultation period’ of review of personal insolvency and are considering replacing DMPs (probably in 2024). The replacement process is called a ‘Statutory Debt Repayment Plan’ (SDRP). The SDRP will be a new statutory debt solution focussed on repayment of debt, rather than debt relief, addressing a gap in the debt solution landscape.
The SDRP will include a broad range of debts, including debts owed to the Government and to creditors outside of financial services, and will protect debtors from enforcement action, creditor contact, and interest, fees and charges on their debts while they repay them.
[See ‘FCA’, ‘Financial Conduct Authority’ and ‘Unsecured Creditors’.]
Debt Relief Orders (DRO) are a statutory alternative to Bankruptcy, for a debtor who wants to find ultimate relief from their creditors after a set period of paying back a lesser sum to them.
The individual debtor is usually freed (‘discharged’) from their debts after 12 months, unless it can be proved they have been careless or lied, in which case it can be extended. In some respects this personal insolvency solution can be called a ‘Bankruptcy-lite’.
This statutory intervention is one way for a debtor to deal with debts, if they owe less than £30,000 to all creditors, only have a disposable monthly income of £75 or less each month and do not own their home.
The full eligibility criteria is as follows:
